Losers

IPO’s & RTO’s

Shiny new things, the start of a new journey, it has its attraction. To be honest with myself, the skillset to appropriately value a project & share structure from the ground up is… Not one I fully possess. I learned a lot over the years but often rely on other (trusted) investors’ opinions. It is easier to have the possible red flags pointed out to you for further research than to try and find all these potential faults yourself. You can’t know it all.

Where is the paper placed & at what price? Any legacy holders that will want to cash out asap? The company starts with a clean track record, so it’s like any new politician: lots of promises, but what & how will they actually accomplish their goals?

Even keeping this restricted to people involved you trust, they also have to rely on many others (financing groups, legacy holders, institutions, etc.) they can influence but not control.

Greenfield plays

Too damn hard. I’m not a geo, nor a millionaire. How compelling the maps may look, every target has its own very specific variations. And let’s be real, mother nature stacked the odds against us. The minimum requirements to even consider these are a very tight shareholder structure & a sizeable price for success (Go big or go home).

==> Why risk it when many real discovery holes take several hours/days or follow-up results to be fully re-rated

==> Personal Take-away: Limit exposure to greenfield plays

Short-term ‘event’ plays

Several ‘events’ didn’t play out or didn’t get recognized… Resulting in multiple smaller losses or gains that overall add up to a net loss. These include potential discovery holes, Mgmt. changes, strategic investor entering, solid drill hits, positive permitting news, a government coup, resource expansions, positive economic studies, etc.

With tight stops & fun to play, this doesn’t bother me too much. Costlier on time spent, but also learns you to assess events quickly, make buy/sell calls, and learn from each situation. TIP: Keep a logbook of all these situations & lessons learned

Now now, is it that easy? Hell no. First off, how do you quantify & identify a ‘real discovery hole’. Secondly, do you have the stomach to buy something that is up 50,100,150% on the day? What is your exit strategy when follow-up holes are mediocre or limiting the deposit’s size? What is your position sizing strategy? When do they get upgraded to a conviction play?

Winners

Large & recent conviction plays

CAN’T READ ENOUGH on these. Sedar & NR from the last 6-18months, company interviews, mailing/calling mgmt., asking around, previous discussions from other investors (hashtag & channel reading),… The whole show. You feel like an energetic bunny, WHY aren’t more people jumping on this?! I found these periods of hyperfocus can only be sustained for a few weeks.

Yet to be moved to a ‘drawer play’ you need several months of follow-up, and more context. Has mgmt. proved themselves trustworthy, have they made the right choices (financings come to mind)? Speaking with other shareholders built more conviction or raised more questions. What do peers say about them? What is the word on the street?

Building a position is ideally also spread over this time, taking advantage of learning more about the company & seeing any market weakness to put in a bid.

Drawer plays

De-risked conviction plays, let the mgmt. team execute and just wait. The heavy work is done (due diligence time spend), and day-to-day specifics are not of immediate interest anymore. Questions like ‘when assays?’ get faded.

Note: In other years, these bigger positions would account for my largest losses, so I’m not advocating that conviction plays are a sure route to success. But remember “YTD” is a useless scale in this sector, each project has its own timeline.

Short-term ‘event’ plays

Some of these provided a quick and dirty 10-50% return, enough to fund the next round of ‘event’ plays. I do feel a focused PF on these – thus keeping +50% in cash at all times – can be a great PF strategy for the active & seasoned speculator.

Watchlist

Maybe the most important section. MANY companies are grinding along and doing great work… but as an investor, it isn’t just the perfect set-up to get involved…just yet or ever. Macro, the commodity itself, a looming financing, a dull period of low newsflow, etc.

For sure you will miss the boat on a few and curse “‘Fuck, why did I wait??”… You can’t kiss all the girls…

Fwiw, the Panda PF is at around +25% YTD. Thanks to many of you out there freely sharing your insights. God bless.

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